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2017 (9) TMI 1228 - AT - Income TaxAssessability of profits offered by the assessee in its return of income - taxation on who's hands - Held that:- The additional ground of appeal requiring no investigation of facts, is admitted. We have already in assessment year 2008-09 of even date order in the case of M/s. Vascon Hadapsar Ventures held that the said amount is to be taxed in the hands of M/s. Vascon Engineers Ltd. i.e. the assessee before us. Consequently, there is no merit in the additional ground of appeal raised by the assessee Disallowance on account of expenses under section 14A r.w.r. 8D - Held that:- Because of availability of interest free funds with the assessee vis-à-vis total investments made, there is no merit in disallowing any part of interest expenditure debited to the Profit and Loss Account, as attributable to the earning of exempt income. Accordingly, we delete the disallowance made under Rule 8D(2)(ii) of the Rules. Disallowance under Rule 8D(2)(iii) of the Rules of administration expenses being equivalent to one half percent of average of the value of investments - Held that:- Referring to assessee's pleadings that in case the disallowance is to be made, then the value of strategic investments made by the assessee in Special Purpose Vehicles needs to be excluded for computing the aforesaid disallowance, we find merit in the plea of assessee in this regard and accordingly, direct the Assessing Officer to re-compute the disallowance in the hands of assessee. The assessee has suo moto disallowed ₹ 6,01,956/- which may be considered as disallowance under Rule 8D(2)(iii) of the Rules. Accordingly, the ground of appeal No.1 raised by the assessee is partly allowed. Disallowance of Donation payment - Held that:- The assessee is carrying out the activities of upliftment of public at large and by way of making contributions for upgradation of Science lab or providing ambulance to organizations or contributing to the society by purchasing paintings, etc., then such activities of assessee are to create and establish image of assessee company in the eyes of public. The business carried on by the assessee is relatable to public at large, where the tenements built by the assessee were to be picked up by the public. Hence, the expenditure incurred by the assessee in this regard is duly to be allowed as business expenditure in the hands of assessee. Here, it may be pointed out that in some cases, the assessee has receipts of donations under section 80G of the Act. The Assessing Officer is directed to verify the same and allow the claim of such receipts under section 80G of the Act Denial of leave encashment - Held that:- We direct the Assessing Officer to verify the claim of assessee and allow the deduction to the extent of leave encashment actually paid during the year under section 43B of the Act. There is no merit in the alternate plea raised by the assessee that the provisions of section 43B(f) of the Act were struck down Disallowance of ESOPs discount expenses - Held that:- The issue of allowability of ESOP expenses on the date of exercising of option by the assessee was held to be an ascertained liability and not contingent liability by the Special Bench of Bangalore Tribunal in Biocon Ltd. Vs. DCIT (2013 (8) TMI 629 - ITAT BANGALORE). The Special Bench held the said discount on ESOP was to be allowed as deduction under section 37(1) of the Act, during the years of vesting on the basis of percentage of vesting during such period, subject to upward or downward adjustment at the time of exercise of option.Following the same parity of reasoning, we allow the claim of expenditure on account of exercise of ESOP option in the hands of assessee to the extent of 1/3rd as claimed by the assessee at ₹ 41,58,745/-. The ground of appeal raised by the assessee is thus, allowed
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